Traverse City’s “free” WiFi – which is intended to only work outside in the downtown area – was started through a partnership between Traverse City Light & Power (TCL&P) and the DDA back in 2014. TCL&P fronted $790,000 to build out the network and the DDA promised to pay the utility back in installments of $65,000 a year through 2024.

A May 2 article in The Ticker explains, based on DDA data, that around 1,000 uses logged on to the network in a one week period. According to the Traverse City website, its official population is14,572 and its daytime population is more than double that amount.

Adding insult to injury, instead of just cutting losses (which will continue to escalate), officials are wasting more time and resources on “improvements.” While the exact plan for the next phase of the “free” WiFi is TBD, they are considering expanding signal locals and bandwith, expanding the WiFi to be citywide, and using the WiFi for a security camera network.

Meanwhile, TCL&P is moving forward with an ill-advised broadband network. Much like Traverse City's “free” WiFi, government-owned networks (GONs) have a track record of disappointment and failure.

Grover Norquist, president and founder of Americans for Tax Reform, sent members of the TCL&P board a letter last month, urging them to call off the GON before it soaks up more public resources. The full text of the letter is below:

April 1, 2019

To: Members of the Traverse City Light & Power Board

From: Americans for Tax Reform

Re: Don’t be fooled by GON proponents

Dear Board Member,

On behalf of Americans for Tax Reform (ATR) and supporters across Traverse City, I write to urge you not to be fooled by proponents of the Government-Owned Network (GON) plan pending before you. As has been demonstrated by the GON disasters throughout the country, where GONs have either failed outright or are being propped up by taxpayers, government entities are not capable of successfully playing in the broadband space.

Even in its early phases, Traverse City Light & Power’s GON experiment seems on track to end in tragedy. Its partner, Fujitsu, which was selected to create a “business, design and operational plan,” has a less than stellar track record when it comes to GONs. Just take a look at KentuckyWired, for example.

Kentucky officials selected to work with Fujitsu for its statewide GON, KentuckyWired, which was sold to taxpayers as a $350 million project that would be complete by the spring of 2016. Now, around three years past its intended date of completion, less than a third of the network has been installed, none of it is usable, and a recent report from the state auditor concludes that taxpayers will end up wasting around $1.5 billion on this redundant network over its 30-year life.

In addition, city officials should also note that proponents of Traverse City Light & Power’s GON plan cannot help but see the outcome through rose-colored glasses. It is in the best interest of Fujitsu – which has been chosen to determine the extent to which there is a business case for the network – if the city moves forward with a plan, as it would also be the equipment provider and eventual operator.

Fujitsu aside, a GON in Traverse City would be a huge mistake. As has been demonstrated by dozens of GON failures throughout the country, the construction and maintenance of broadband networks are not functions that government entities are well suited to take on, as they require ongoing and expensive maintenance and upgrades in order to function properly. Too late in the game, government officials realize the costs for such undertakings were grossly underestimated, and that they lack the necessary financial resources and expertise to remain up-to-date in such a rapidly changing industry.

Along with underestimated costs, demand for GONs is often significantly overestimated. Despite having access to a GON, consumers often choose to remain with their trusted private sector providers. Underestimated costs and overestimated demand is a recipe for a financial gap that the city’s taxpayers and utility ratepayers will be forced to fill.

Rather than moving forward with this GON project, Traverse City officials should follow the lead of those in Solon, Ohio, who recently rejected a proposal that would have given Fujitsu $45,000 for a feasibility study for a potential GON. ATR opposes Traverse City Light & Power’s GON plan and urges officials to pull the plug before its too late, and city’s taxpayers and utility ratepayers are left on the hook with nothing to show for it.

Sincerely,

Grover Norquist

President

Americans for Tax Reform

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